Goldman reduces expectations of September U.S. rate hike
- Stocks dip as earnings pour in, consumer discretionary lags
- UPDATE: Alphabet (GOOG) Tops Q3 EPS Views; Revs Strong
- Baker Hughes (BHI), General Electric (GE) in Partnership Talks, Not Merger Talks
- Cirrus Logic, Inc. (CRUS) Q2 Results and Guidance Beat Estimates
- Amazon.com (AMZN) Misses Q3 EPS by 26c, Offers Q4 Guidance
Get daily under-the-radar research with StreetInsider.com's Stealth Growth Insider Get your 2-Wk Free Trial here.
By Karen Brettell
(Reuters) - Goldman Sachs has reduced its expectation that the Federal Reserve will raise interest rates at its September meeting, citing weaker-than-expected economic growth and the lack of clear signals from a senior Fed official on Tuesday.
Goldman now views the Fed as having a 40 percent likelihood of raising interest rates this month, down from 55 percent on Friday, economists at the bank said in a note sent late on Tuesday.
The revision came after data on Tuesday showed that the U.S. economy's service sector expanded in August but at a slower pace than in July, and the fall from the previous month was the largest since the 2008 financial crisis.
"While this is just one indicator, the surprise was meaningful, and there may have been some Fed officials feeling lukewarm on a September hike to begin with. In these circumstances, one large surprise could carry a lot of weight," Goldman said.
San Francisco Fed President John Williams also gave no new clues that a rate hike is likely this month when he spoke on Tuesday, Goldman said.
Goldman had raised its estimate of a September rate hike on Friday after nonfarm payrolls rose by 151,00 jobs in August, saying that employment growth was above the pace Fed officials typically consider sufficient to hold the unemployment rate steady over time.
Goldman now sees a 70 percent chance that the U.S. central bank will raise rates at least once this year, down from 80 percent.
(Editing by Frances Kerry)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Italian earthquakes cause widespread damage, but no-one killed
- Google parent Alphabet profit surges on mobile, video ads
- Tesla up on surprise profit, reassurance on capital plans
Create E-mail Alert Related CategoriesFed, General News, Reuters
Related EntitiesNonfarm Payrolls, Goldman Sachs
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!